Points Structure of Trade Loyalty Programs

The core idea of any trade loyalty program should be that the trade partners do what the company needs and in return they get what they need. The first part of this can only be achieved through designing a points structure which incentivises everything required from the company’s side. In this post we elaborate on the various popular metrics used in the points structure of a trade loyalty program.

· Business Value

This is the most basic metric on which most of the loyalty program structures are built. But unfortunately, most also end there which is a shame as most of the potential in a loyalty program is left untapped. At its heart this metric is simply giving back a percentage of the business being done in the form of points. The percentage can be varied by partner size by tiering them in multiple levels. But without combining this with other metrics the program quickly devolves into a generic discount/margin structure. A few programs however go a step too far and eliminate this metric altogether. This is also counter productive as the hook of earning points on each transaction is lost. Points earned on business value should be the base points which will be used across other metrics and act as a foundation of the program.

· Target Achievement/Growth

This metric essentially involves assigning individual business/growth targets to the partners. This is to incentivise achieving a certain growth level. This metric comes very handy at the end of month/quarter situations where partners tend to earn disproportionate points for doing small amount of business and achieving their remaining targets. The bonus points should be linked to the base points as that would take care of partners only earning points as per their potential and the program remaining within the overall budget.

· Milestone Achievement

This metric gives bonus points on hitting identified milestones over a longer period. This is to keep the partners engaged in the program despite reaching their targets. It also rewards larger partners and makes every partner aspire to grow their business. It also ensures continuous business.

· Focus Products

This is a metric where higher percentage of points are given out on specially identified products. It is tactical in nature and the focus products should be rotated periodically to keep the program fresh. This especially comes in handy during new product launches or liquidation of old stock. Hen used correctly, partners tend to eagerly look forward to knowing what the focus products are in that period to ensure maximisation of points.

· Range Selling

While this metric might not be relevant to single product companies it is very useful for multiple SKU companies, specially in the space of FMCG. It incentivises buying different kinds of products within a period. This metric is very useful to the straggler products in the product range which don’t witness high demand. But to achieve their range targets products like that tend to get picked up by partners. Products like that tend to be forgotten and vanish from shelf space and don’t normally have enough budgets to run special campaigns. But this metric can ensure sales of such products.

· Visual Merchandising

Being visible on shelfs is of paramount importance in many product lines and ensuring that products remain on the shelves is one of the most primary things any trade marketing manager chases. By including this metric in the loyalty program, the goals of the company and the trade are aligned. But this can only work in the presence of a strong and reliable measurement mechanism. Only by measuring shelf space accurately can you reward it. To know more about how to measure the shelf space, please visit our Retail Audit section here - . To know more about our Visual Merchandising deployment services, please visit our VM section here -

· Process Compliance

Beyond all these there are many other parameters on which the partners can be rewarded. One major area is of process compliance. Especially in industries and supply chain levels where the companies enjoy much deeper relationships with the trade partners. Think of Exclusive showrooms or Distributors. In those cases, a few process compliance metrics such as timely payments, IT process compliance, Inventory management, HR management, etc can be added to the program.

Each industry is different and each company is different from others. To let us help you come up with the most optimal points structure for your loyalty program, please leave an enquiry in the following page and let us reach out to you.

Topics: Loyalty Programs

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